Analysis of Bitcoin Reserve Company Stock Price Premium Phenomenon

With the development of the Bitcoin market, companies that have incorporated Bitcoin into their balance sheets have become the focus of investors. Although there are various ways to gain direct exposure to Bitcoin, many investors still choose to indirectly hold Bitcoin by purchasing shares of Bitcoin reserve companies. The stock prices of these companies are often higher than their net asset value (NAV) of the Bitcoin they hold, resulting in a significant premium.

The premium rate reflects the difference between the company's stock price and its per-share Bitcoin holding value. For example, if a company holds Bitcoin worth 100 million dollars and has 10 million shares outstanding, the per-share Bitcoin NAV would be 10 dollars. If the stock price is 17.5 dollars, the premium rate reaches 75%.

The reasons for the formation of premiums

1. Leverage Effect: Bitcoin reserve companies can leverage through the public capital markets by raising funds through the issuance of bonds and stocks to increase their Bitcoin holdings. This makes them high β proxy tools for Bitcoin, amplifying their sensitivity to market fluctuations.

2. Capital acquisition capability: These companies can utilize the "market price issuance" ( ATM ) stock issuance plan to gradually issue stocks at the current stock price. When there is a premium in the stock price, the amount of Bitcoin that can be purchased for every 1 dollar raised will exceed the dilution of Bitcoin holdings per share caused by the issuance, forming a "per share Bitcoin holding value appreciation cycle."

3. Composite narrative effect: Each successful fundraising and Bitcoin accumulation has strengthened investors' confidence in this model. Investors not only purchased Bitcoin but also bought the "ability to continuously accumulate Bitcoin in the future."

premium range

The premium rate differences among various Bitcoin reserve companies are significant. Taking a well-known Bitcoin reserve company as an example, its premium rate is about 75%. In contrast, some smaller companies have premium rates that even exceed 200%. This indicates that market pricing not only reflects the growth potential of Bitcoin itself but also encompasses a comprehensive consideration of capital market access capability, speculative space, and narrative value.

Bitcoin收益率

"Bitcoin yield" is one of the core indicators driving stock premiums. It measures the growth of the company's Bitcoin holdings per share over a specific period, reflecting the efficiency of the company's ability to raise funds to increase Bitcoin holdings. Some companies provide real-time Bitcoin data dashboards that dynamically update Bitcoin positions, Bitcoin holdings per share, and Bitcoin yield, enhancing transparency.

Reserve proof dispute

There is controversy in the industry regarding whether to disclose proof of reserves. Some companies believe that disclosing proof of reserves may pose security risks, while others demonstrate their Bitcoin holdings through on-chain verification mechanisms, providing investors with a direct way to verify.

The Potential Impact of Premium Disappearance

The business model of a Bitcoin reserve company relies on the continued existence of a stock price premium. When the stock price is higher than the per-share Bitcoin value, equity fundraising can achieve an appreciation of the per-share Bitcoin holdings. However, if the stock price falls near the NAV, equity dilution will weaken rather than enhance shareholders' Bitcoin exposure.

This model relies on a self-reinforcing cycle: stock price premiums support fundraising ability, fundraising is used to increase holdings of Bitcoin, the increase in Bitcoin holdings strengthens the company's narrative, and the narrative value maintains the stock price premium. If the premium disappears, this cycle will be broken, potentially leading to higher financing costs, a slowdown in Bitcoin accumulation, and a weakening of the narrative value.

Conclusion

The future development of Bitcoin reserve companies will depend on their financial discipline, transparency, and the ability to increase the per-share Bitcoin holdings. The "option value" that makes these stocks attractive in a bull market may quickly turn into a burden in a bear market. Investors need to closely monitor market changes and assess the long-term sustainability of these companies.